June 2024: China Monthly Tax Updates

On June 6, 2024, China’s State Council released the Fair Competition Review Regulations to promote fair competition in the market. The regulations prevent local governments from offering incentives without approval, impacting foreign investors. Shanghai introduced new temporary import repair tax policies in the free trade zone.

On June 6, 2024, the State Council released the final version of the Fair Competition Review Regulations (the “Regulations), in an effort to “unify the domestic environment” and level the playing field between state-owned and private companies.

The regulations, which are based on China’s Anti-Monopoly Law, will require administrative authorities to conduct fair competition reviews when drafting laws, administrative regulations, local regulations, rules, normative documents, and policy measures (hereinafter collectively referred to as policy measures), to ensure that they do not unfairly favor certain market entities.

Among others, the Regulations specially mentioned that without a legal or administrative regulatory basis or State Council approval, local policies also cannot include the following content that affects production and business costs:

Local governments often promise various incentives during investment attraction processes. However, the restrictions on local governments from offering preferential treatments, such as tax incentives or subsidies, without proper legal or administrative approval can significantly impact foreign investors. Foreign investors must be vigilant during negotiations with local governments, understanding that any promises of special tax breaks, subsidies, or other financial incentives may not hold up if they violate fair competition regulations. Investors are advised to conduct necessary due diligence to protect their legitimate rights and interests.

For more information about the Fair Competition Review Regulations, please read here.

Five departments of Shanghai have jointly issued a notice titled Regarding Temporary Import Repair Tax Policies in the China (Shanghai) Free Trade Zone, effective from June 27, 2024. or

This article is republished from China Briefing. Read the rest of the original article.

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